Thursday, 4 July 2013

Sahara: IEA on North Africa

The International Energy Agency (IEA) medium-term outlook report, published on 28 May, anticipates that oil production from OPEC members Algeria, Angola, Libya, and Nigeria will stagnate over the next five years at 7.12 million b/d, posting more or less zero growth from 2012 to 2018. Last year, the agency anticipated supply growth of 685,000 b/d from 2011 to 2017.
Antoine Halff , head of markets at the IEA in Paris, said that at first the Arab Spring of 2011 looked like a blip as production recovered quickly from the war in Libya. 'But it turns out it is a big event,' he said. 'We are beginning to see security issues in northern and western Africa and this will have implications for OPEC supply.' Although oil production recovered from the Arab Spring faster than expected, the delayed impact of the revolutions that swept across North Africa is now hurting supply growth forecasts for Libya, Algeria, and Nigeria.
The IEA is particularly bearish about Algeria, forecasting a drop in oil production capacity from last year's 1.2 million b/d to 0.8 million b/d by 2018. The other African members of OPEC will see their production capacity stagnate instead of posting significant growth, as the IEA forecast only a year ago. This gloomy outlook comes on the back of escalating security risks, uncompetitive fiscal terms, challenging local content requirements, and contract sanctity concerns. The IEA concludes, 'Increased violence by Islamist extremists and militants, against a backdrop of political instability across much of northern and western Africa since the Arab spring, is changing the equation for acceptable risks for international oil companies.'
For more news and expert analysis about the Sahara region, please see Sahara Focus.

© 2013 Menas Associates

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